Valaris (VAL) AI Stock Analysis

• Market Cap: $6.30B
• Dividend Yield: N/A
• Average Volume (3M): 2.09M
• Price to Earnings (P/E): 16.5
• Beta (1Y): 1.12
• Revenue Growth: 6.81%
• EPS Growth: -61.94%
• Country: US
• Employees: 4,130
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): 10.26
• Shares Outstanding: 69,230,930
• 10 Day Avg. Volume: 4,128,362
• 30 Day Avg. Volume: 2,092,089
• PEG Ratio: 0.02
• Price to Book (P/B): 1.12
• Price to Sales (P/S): 1.50
• P/FCF Ratio: 17.55
• Enterprise Value/Market Cap: 1.13
• Enterprise Value/Revenue: 3.02
• Enterprise Value/Gross Profit: 10.23
• Enterprise Value/Ebitda: 9.45
• 1Y Price Target: $55.00
• Price Target Upside: -42.56% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $104.00 ▲(8.62% Upside)
• Action: Reiterated Date: 02/20/26
• Date: Action: Reiterated 02/20/26

The score is driven primarily by strong current profitability and improving leverage, supported by a clear technical uptrend. Backlog growth and positive earnings-call tone add support, while weaker cash-flow conversion, recent revenue softness, and cyclical/commodity uncertainty keep the score from being higher; valuation is only moderate with no dividend support.

Positive Factors

Strong margins and profitability

Sustained high TTM margins indicate Valaris earns premium returns on its offshore contracts and benefits from disciplined cost control. Higher operating and net margins improve cash generation potential and provide a buffer through the offshore cycle, supporting reinvestment and deleveraging over the medium term.

Growing multi-year backlog and high-spec wins

A near-$4.7B backlog anchored by multi-year floater and jackup awards secures revenue visibility and dayrate exposure in deepwater basins. Multi-year contracts reduce near-term utilization risk, enable better planning for high-spec fleet deployment, and support sustained cash flows through the next several years.

Improved leverage and healthy return on equity

Material decline in leverage and a double-digit ROE reflect stronger capitalization and profitability. A cleaner balance sheet increases resilience to industry cyclicality, gives management flexibility for capex or fleet optimization, and lowers refinancing risk over the medium term.

Negative Factors

Weak cash conversion to FCF

Earnings are not fully converting to cash, limiting internally generated funding for capex, buybacks or debt paydown. Persistent subpar cash conversion increases sensitivity to working-capital swings and may constrain flexibility during downturns or large strategic spends.

Revenue softness and earnings volatility

Negative recent revenue trends and a history of large cycle-driven earnings swings highlight commodity and demand sensitivity. This structural revenue volatility complicates forecasting, makes capital allocation riskier, and reduces predictability of returns across a 2–6 month horizon and beyond.

M&A execution and integration uncertainty (Transocean deal)

Pending all-stock acquisition introduces execution, regulatory and integration risks that could disrupt operations and strategic independence. Approval uncertainty, management/board changes and required synergy delivery create structural risk to near-term cash flow visibility and long-term fleet strategy execution.

Valaris Business Overview & Revenue Model

Company Description

Valaris Limited provides offshore contract drilling services to the international oil and gas industry. The company owns an offshore drilling rig fleet of 56 rigs, which include 11 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and 40 jackup rigs. It serves international, government-owned, and independent oil and gas companies in the Gulf of Mexico, the North Sea, the Middle East, West Africa, Australia, and Southeast Asia. The company was incorporated in 2009 and is based in Hamilton, Bermuda.

How the Company Makes Money

Valaris generates revenue primarily through its drilling contracts with oil and gas exploration and production companies. The company's revenue model is based on day rates charged for the use of its drilling rigs, which vary depending on the rig type, contract terms, and market conditions. Key revenue streams include long-term contracts for deepwater and mid-water drilling, as well as shorter-term contracts for jack-up rigs. Additionally, Valaris offers rig management services and support services to enhance operational efficiency, contributing to its earnings. Strategic partnerships with major oil and gas companies and a focus on maintaining a modern and efficient fleet help to secure ongoing contracts and drive revenue growth.

Valaris Financial Statement Overview

Summary

Profitability is strong in TTM (gross ~26%, operating ~23%, net ~41%) and leverage has improved (debt-to-equity ~0.34; ROE ~17%). Offsetting this, TTM revenue has turned slightly negative, historical earnings have been volatile, and cash conversion trails earnings (OCF ~0.79x NI; FCF ~0.37x NI) with TTM FCF down ~19% vs prior period.

Income Statement

TTM (Trailing-Twelve-Months) profitability is strong: gross margin ~26%, operating margin ~23%, and net margin ~41%. Earnings power has improved materially versus 2022–2024 as operating profitability expanded, although revenue growth has turned negative in TTM after solid growth in prior years. A key watch-out is that net income has been unusually volatile historically (deep losses in 2020–2021 and outsized profits in 2023), suggesting results can be heavily influenced by cycle conditions and/or non-recurring items.

Balance Sheet

Leverage looks reasonable and improving: total debt is ~$1.1B in TTM with debt-to-equity ~0.34, down meaningfully from ~0.52–0.58 in 2023–2024 as equity increased. Returns on equity are healthy in TTM (~17%), indicating improved profitability on the current capital base. Risk remains that this is a cyclical business with a history of sharp losses, so balance-sheet strength needs to be assessed with an eye toward downturn resilience.

Cash Flow

Cash generation is positive but not fully keeping pace with reported earnings. TTM operating cash flow is ~$546M and free cash flow is ~$203M (positive), a clear improvement from multiple years of negative free cash flow (2022–2024). However, operating cash flow is only ~0.79x net income and free cash flow is ~0.37x net income in TTM, implying earnings are converting to cash less efficiently; additionally, TTM free cash flow declined (~-19%) versus the prior period.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.37B	2.36B	1.78B	1.60B	1.23B
Gross Profit	593.00M	601.70M	240.60M	219.30M	164.50M
EBITDA	642.20M	487.80M	142.20M	154.80M	89.70M
Net Income	982.80M	373.40M	865.40M	176.50M	-4.49B
Balance Sheet
Total Assets	5.30B	4.42B	4.32B	2.86B	2.60B
Cash, Cash Equivalents and Short-Term Investments	599.40M	368.20M	620.50M	724.10M	608.70M
Total Debt	1.09B	1.17B	1.16B	565.60M	555.30M
Total Liabilities	2.13B	2.18B	2.33B	1.56B	1.53B
Stockholders Equity	3.17B	2.24B	1.99B	1.29B	1.07B
Cash Flow
Free Cash Flow	202.70M	-99.70M	-428.60M	-80.00M	-124.90M
Operating Cash Flow	546.20M	355.40M	267.50M	127.00M	-66.00M
Investing Cash Flow	-205.60M	-452.30M	-665.80M	-16.70M	-3.70M
Financing Cash Flow	-103.60M	-158.30M	285.50M	-6.40M	388.70M

Valaris Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 95.75
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VAL, the sentiment is Positive. The current price of 95.75 is above the 20-day moving average (MA) of 72.41, above the 50-day MA of 60.54, and above the 200-day MA of 51.49, indicating a bullish trend. The MACD of 10.42 indicates Negative momentum. The RSI at 75.58 is Negative, neither overbought nor oversold. The STOCH value of 90.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VAL.

Valaris Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TDW	78 Outperform	$3.54B	24.90	13.43%	―	4.42%	-13.55%
OII	77 Outperform	$3.30B	10.34	39.64%	―	8.71%	72.09%
VAL	75 Outperform	$6.30B	16.49	36.35%	―	6.81%	-61.94%
WFRD	69 Neutral	$7.52B	17.66	28.89%	1.25%	-10.19%	-23.74%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
NOV	62 Neutral	$7.20B	51.69	2.29%	3.24%	-1.43%	-63.13%

Valaris Corporate Events

Valaris Expands Offshore Contract Backlog and Streamlines Fleet

Valaris reported a fleet status update as of February 17, 2026, highlighting that new contracts and extensions since October 23, 2025 have added nearly $900 million of backlog and lifted its total contracted revenue backlog to about $4.7 billion. The new work is anchored by multi-well and multi-year floater contracts for drillships VALARIS DS-7, DS-8 and DS-9 offshore Angola and Brazil, alongside a series of jackup awards and extensions with BP Indonesia, Eni Mexico, Esso Australia, GB Energy, Spirit Energy, TAQA, Adura and GE Vernova across Asia-Pacific, the North Sea and an offshore wind project in the UK.

These awards extend rig visibility into 2028 and beyond, with notable contracts such as an 800-day Brazil campaign for Shell valued at about $300 million and a two-year Indonesian jackup program worth roughly $74 million, reinforcing Valaris’s leverage to strong day rates in key basins. At the same time, Valaris is pruning its fleet by classifying semisubmersible VALARIS DPS-1 as held for sale for recycling and confirming the December 2025 recycling sales of jackups VALARIS 102 and 145, signaling a continued focus on high-spec assets and disciplined capacity management in the offshore drilling cycle.

The most recent analyst rating on (VAL) stock is a Buy with a $64.00 price target. To see the full list of analyst forecasts on Valaris stock, see the VAL Stock Forecast page.

Valaris Agrees to Be Acquired by Transocean

On February 9, 2026, Valaris and Transocean signed a Business Combination Agreement under which Transocean will acquire all outstanding Valaris shares via a Bermuda court-approved scheme of arrangement, issuing 15.235 Transocean shares for each Valaris share. After completion, existing Transocean shareholders will own about 53% and Valaris shareholders about 47% of the combined company, with Valaris becoming a Transocean subsidiary and two Valaris directors joining Transocean’s board, subject to shareholder, court and regulatory approvals.

The deal sets detailed terms for treatment of Valaris shares, warrants and equity awards, includes customary no-solicitation covenants, and lays out termination rights with reverse break fees of $195 million for Transocean and $173 million for Valaris, plus expense reimbursement in certain failed-vote scenarios. Support agreements signed the same day by shareholders holding roughly 18% of Valaris and 9% of Transocean stock commit those investors to vote in favor of the transaction, underscoring significant, though not definitive, backing for a merger that could reshape competitive dynamics in offshore drilling if completed.

The most recent analyst rating on (VAL) stock is a Buy with a $64.00 price target. To see the full list of analyst forecasts on Valaris stock, see the VAL Stock Forecast page.

Transocean to Acquire Valaris in $5.8 Billion Merger

On February 9, 2026, Transocean and Valaris announced a definitive all-stock business combination agreement under which Transocean will acquire all outstanding Valaris shares in a transaction valuing Valaris at about $5.8 billion and the combined enterprise at roughly $17 billion. The deal, unanimously approved by both boards and expected to close in the second half of 2026 subject to regulatory and shareholder approvals, will see Valaris investors receive 15.235 Transocean shares per Valaris share, leaving Transocean shareholders with about 53% of the enlarged group and Valaris holders with 47%.

The combination will create what the companies describe as an industry-leading offshore driller with a diversified fleet of 73 rigs, including 33 ultra-deepwater drillships, nine semisubmersibles and 31 modern jackups, and an estimated pro forma market capitalization of $12.3 billion and contract backlog of about $10 billion. Management expects more than $200 million of additional cost synergies, alongside existing savings programs, to bolster cash flow and accelerate deleveraging, while the enlarged fleet, broader basin footprint and enhanced trading liquidity are intended to strengthen competitive positioning and potentially expand the investor base in a tightening offshore drilling market.

The merged company will retain Transocean’s Swiss incorporation and Houston administrative base, be led by Transocean CEO Keelan Adamson with Jeremy Thigpen as executive chairman, and have a board comprising nine Transocean and two Valaris directors. For customers and other stakeholders, the tie-up is framed as creating a single platform capable of operating any rig type in virtually any offshore environment, although the transaction remains contingent on customary approvals and carries execution, integration and market risks highlighted by both parties.

The most recent analyst rating on (VAL) stock is a Buy with a $64.00 price target. To see the full list of analyst forecasts on Valaris stock, see the VAL Stock Forecast page.